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You got a pink slip. Your head reels from the shock and there’s a knot of fear in the pit of your stomach. Figuring out the answer to the question, “Now, what?” seems like the hardest job you’ve ever faced. Take a deep breath. You can take steps to ensure your financial survival during this period.

Get to the unemployment office fast

Ideally, before you left you received a briefing from someone in the human resources department at your former employer about how to apply for unemployment benefits. In fact, Bruce McClary, spokesman for ClearPoint Credit Counseling Solutions, headquartered in Richmond, Va., says the best time to bone up on the process is while you still have a job.

Generally you are eligible for a maximum of 26 weeks of unemployment benefits in most states, but the economic stimulus bill signed into law in February 2009 extends the benefit period to an additional 33 weeks through the end of 2009. (Earlier legislation had provided for the same benefit extension but only until March 2009.) The new law also provides for an extra $25 per week in benefits and exempts the first $2,400 from income tax.

7-step plan

Get to the unemployment office fast

Bring your family in on the plan

Manage your mortgage payments

Put the credit cards away

Know your health insurance options

Don’t touch your retirement fund

Commit to saving money

It usually takes two to three weeks after filing a claim to receive your first check, but the recent accelerated pace of layoffs has made it hard for many state unemployment offices to keep up — so be prepared for some delay. The stimulus bill tries to address this issue by providing funds to help with application processing.

Bring your family in on the plan

This is not the time to put on a brave face for the rest of the family. Even the kids need to be part of the discussion of this life-changing event.

“First of all, you’ve got to tell them that things are changing,” says Sharon Danes, professor and family economist in the College of Education and Human Development at the University of Minnesota. “You don’t have to give them lots of detail, but you let them know that mom or dad has lost a job, and what that means is that we’re not able to spend as much money. Younger children may not know what’s going on, but they’re going to sense that something is wrong.”

The next step is to gather everyone around the table and talk about how the family spends money, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, or NFCC, headquartered in Silver Spring, Md. Then, for 30 days, Cunningham says, “have anybody in the house that spends money track their spending.”

At the end of the 30 days, have a discussion about how the family can reduce spending. “If you can take $10 out of 10 (spending) categories, you’ll never feel it,” Cunningham says.

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Gloria Nye, a family economist at the Louisiana State University Agriculture Center, suggests you categorize your spending into “needs” and “wants.” “The ‘want’ spending has to stop, and the ‘need’ spending has to be prioritized,” Nye says.

When you’ve cut back as much as you can, the next step may be to liquidate some of your assets — by having a yard sale or selling a few items on eBay or Craigslist, for instance. You might even consider bartering with neighbors and friends for household repairs and other services that would otherwise eat into your family’s budget.

Manage your mortgage payments

If you are having trouble paying your mortgage, call the mortgage company right away and explain your situation. Ask what they can do to help you out, such as perhaps allowing you to defer payment for a month or two. If you need more time — and more help negotiating — consult a certified housing counselor, whom you should be able to find through a nonprofit credit counseling agency.

Unfortunately, Nye says she has talked to several homeowners whose mortgage lenders refused to renegotiate the terms until the homeowner had fallen two months behind. “What that does is ruin their credit score,” she says.

McClary says, “First and foremost, it will train wreck your credit, which can actually take you out of the running for any other programs that may be available later, such as refinancing.”

Put the credit cards away

More than one-third of Americans do not have any nonretirement savings, according to a recent NFCC survey. With no savings to fall back on, Cunningham says, living off credit cards becomes the default system for getting by.

“Resist the urge to continue your pre-unemployment lifestyle and simply charge your way through the recession,” Nye says.

In fact, now that you’re in survival mode and operating under a bare-bones family budget, the only good excuse to reach occasionally for a credit card is to pay for an absolute necessity, such as food, says Joseph Birkofer, a Certified Financial Planner and principal at Legacy Asset Management in Houston. And there’s another reason not to count on credit cards to tide you over between jobs: “Credit card companies are very good now at gathering data, and the chances of you having your credit cut off the day after your job is let go are pretty high,” Birkofer says.

Know your health insurance options

The Consolidated Omnibus Budget Reconciliation Act, or COBRA, mandates that if you worked for a company with 20 or more employees that provides a health care plan, you have the option of getting a temporary extension of your coverage after your job is terminated. You will usually have to pay the entire premium, but it will be less expensive than getting individual coverage. Under the 2009 economic stimulus package, the federal government will pay 65 percent of COBRA premiums for up to nine months. After that, you will likely have to pay the entire premium, but it will be less expensive than getting individual coverage. By law, the premium can’t be more than the total cost of your coverage before you lost your job plus a 2 percent administration fee.

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The maximum length of COBRA coverage is 18 months for unemployed workers. You can lose coverage earlier if you fail to pay your premiums on time or if your former employer stops offering any health plan. Some health care plans will allow you to convert your group coverage to an individual policy at the end of the COBRA coverage period. For more information, see Bankrate’s story, Coping without group insurance.

Don’t touch your retirement fund

If you’ve already watched your retirement account take a free fall in the stock market, it may be tempting to grab what’s left and use it for your current living expenses. But remember that even long-term unemployment isn’t likely to last as long as your retirement. So think about your need for that cash in the future and just leave it alone.

“There is no way you can make up for the market loss and the actual cash-out loss in your remaining work life,” Birkofer says.

As an illustration, Birkofer says a 50-year-old cashing out an account that dropped from $40,000 to $26,000, following a 35 percent loss, would end up with only about $16,900 after taxes (25 percent plus the 10 percent penalty for withdrawing before age 59½). To build the account back up to the original $40,000 by age 65, assuming an average 8 percent return on new investments, she will need to save $1,473 a year.

But if the money had stayed put, that $26,000 would be worth $82,476, assuming no new contributions were added. “Starting out at zero, which is where they will be after the cash out, means they have to save $3,037 per year to get to $82,476 by 65,” Birkofer says.

Commit to saving money

When you are barely making ends meets with your reduced income, it’s hard to even think about saving. But the habit of setting aside some money now — however small the amount — will pay off in the long run.

“It starts with making it automatic,” Birkofer says. “There are a number of ways to automatically save small amounts of money. There are online banks — HSBC Direct, ING Direct — that will automatically take as little as a dollar out of your bank account every month.”

If you were one of the many caught with little or no savings when your pink slip came, you are painfully aware of the economic disadvantage of not having a nest egg when a crisis hits.

“The minimal amount you should put away in case of unemployment or any kind of emergency in which you have to get your hands on cash quickly should be three to six months of net, or after-tax, income,” McClary says. “The longer you put it off, the longer it takes to save that money.”

Birkofer says it this way, “Even at the depths of a personal economic crisis, if you don’t make room to save, you are blocking the road out of the mess.”

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